This study was designed to establish the extent to which the hippies pose a new kind of dropout problem for higher education institutions; identify those aspects of hippie subculture which attract certain kinds of dropouts; and develop policy proposals aimed at increasing colleges' effectiveness in meeting the needs of contemporary students. Administrators at 9 San Francisco Bay area colleges were interviewed and data were gathered in the Bay area, in the Haight-Asbury section of San Francisco and in Portland, Oregon. Hypotheses concerning the hippies' academic background, ideological commitments, recruitment into "the hippie scene", and views concerning higher education were tested. Because traditional research methods were inappropriate for gathering information, the researchers acted as informal participant observers of the scene, which they later recorded. It was learned that college deans do not perceive hippies as either creating problems or affecting the dropout rate; hippies do not repudiate scholarship but question whether the university affords the opportunity to learn; most intend to return to college and claim satisfactory academic performance there; most were humanities or social science majors; most expressed only vague ideas about university reform; and younger hippies were more bitter about their high school experiences that older hippies about college. The recommendations deal with the distribution of power within the university and the nature of its involvement in the larger community. (JS)